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NBCC is considered by government to construct affordable housing using land available with sick PSUs
CNBCTV18 | June 13, 2018New Delhi

State-owned NBCC is being considered by government to construct affordable housing using land available with sick public sector undertakings.

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Speaking to CNBC-TV18, Anoop Kumar Mittal, chairman, said discussions are going on and nothing has been finalised as far as the Dharavi project in Mumbai is concerned.

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Mittal said company's expenditure is only employee cost and some miscellaneous expenditure. So, margins will increase definitely as employee cost is not going to increase in that proportion.

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Edited Excerpts:

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Your thoughts on Q1. How is the year off to in terms of a start because you gave us very optimistic projections when we spoke to you for FY19 earlier as well?

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In FY19, I expect that the growth should be minimum 30% and it will be visible from from this quarter itself. Obvious reason is some of the large value project, which we started last year in fag end, maybe Q3-Q4, now are giving revenue and this will be booked in this financial year onwards.

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The Goods and Services Tax (GST) impact that you have seen in all of FY18, you think that is largely behind you?

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Yes, except in the first quarter. Last year, that quarter was also inclusive of GST but nevertheless this quarter will show growth of at least 25-30%. In this quarter, we are taking ex-GST and last few quarters were with GST, even then, this quarter will show a growth of 25-30% and next quarter onwards, it’s an apple-to-apple comparison ex-GST.

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You recently bagged a few orders, about Rs 1,200 crore in Himachal Pradesh, almost Rs 400 crore from the Odisha government. Tell us a bit about that. What kind of timeline would this have for execution, when will it start flowing into your revenue stream?

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Recently, we have bagged one order from Union Health Ministry for construction of the All India Institute of Medical Sciences (AIIMS) at Himachal Pradesh. An approximate value is about Rs 1,300 crore and timeline is about three years for construction of entire complex. Because of the necessity in that area for AIIMS, our plan is to start some infrastructure maybe out patient department (OPD) or some hospital by end of this financial year. Therefore, revenue recognition will be seen from this project from Q3 onwards and it will go on.

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Similarly, we have bagged other orders like border fencing work, Pradhan Mantri Gram Sadak Yojana (PMGSY) work and IITs. So all these projects are on track and that is why the revenue booking will start from this financial year and you will see real growth in the company, which we were expecting since last one year.

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There has been some talk of appointing NBCC as the manager, perhaps couple of the properties which are seized by regulatory agencies because of one reason or the other. Has there been any progress and I am trying to understand what is going to be the revenue share, as in what do you gain out of it in terms of your topline?

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NBCC is being considered for developing affordable housing on sick public sector undertaking (PSU) or loss making PSUs and we are also very keen to start those projects on government land and some of the projects are under consideration and detailed project report (DPR) has been prepared and maybe in a month or two month time you will hear about in which part of the country we will start affordable housing. The model will be similar as what we are doing in Kidwai Nagar and other places.

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What will then your affordable housing portfolio grow to if this kicks off this year itself the how much of your revenue you will garner from affordable housing business?

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I am not in a position to give the numbers. But the kind of projects we are considering or preparing DRP, the number will be very high and in comparison to previous years, there will not be any comparison to growth, it will be much beyond expectation because all these land parcels are very large area. So not only affordable housing, some other housing infrastructure will be developed. So, revenue recognition will be definitely much more than what we are talking or expecting.

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Can you give us an update on what is happening with the Dharavi redevelopment project. There were some roadblocks that that project was facing in terms of execution etc. At what stage is the plan at present, where have your talks with the Maharashtra government reached?

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We are regularly talking to Maharashtra government but we have not finalised yet. I heard that Maharashtra government is thinking something different model, where NBCC’s role is still to be finalised. So things are still under discussion, nothing has been finalised as far as Dharavi is concerned.

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However, we are constructing a project in Wadala on behalf of Ministry of Finance. It’s a greenfield project on 40 acre land and is in DPR stage. I expect in next six month time we should be in a position to show something, there maybe a physical work or sale of property, because this project is also self-revenue generation project.

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Where do you see margins sustaining this year?

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This is a project management consultancy (PMC) company, so we work on agency charges. So if we do ex amount of work, we get 10%. Our only expenditure is employee cost and some miscellaneous expenditure. So, margins will increase definitely because employee cost is not going to increase in that proportion. But that will not show a similar kind of percentage growth as will be in topline, because there is a cap of agency charges, but definitely margins will increase. It all depends on how much we do and it may increase by 5-10%. So, definitely margins will also increase.

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The Air India project, the Kidwai Nagar projects were the big ones that’s expected to change the trajectory of NBCC’s earnings. Any other big government orders that could give you high revenue potential over the next one-two years whether it’s the Nauroji Nagar project or even the Pragati Maidan? What are you banking on now?

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We are banking on Nauroji Nagar, which has already started. Pragati Maidan and Netaji Nagar is also under construction. So all these four-five projects will give maximum revenue to our growth other than what we use to do. Therefore, I hope in next three month time, one or two similar kind of projects in Delhi may also be awarded to NBCC on similar model.